By Madison Flewellyn

When millennials complain that they cannot afford a house, “work harder” is often the response of older generations. So, are millennials lazy? Or is there a bigger issue within the housing market?

Allie Saechao, a millennial who lives in the Sacramento region, bought her first home in November of 2023: A three-bedroom, two-bathroom home that cost $575,000. 

“I can’t be a roommate forever,” Saechao said. “I just wanted a place where I could just hunker down and just call it my own and not have to worry about rent going up, or potentially getting kicked out.”

Saechao, who rented prior to buying a home, needed to cut back on spending and save if she wanted to be a homeowner.

“All my money and my paychecks go straight to my mortgage,” Saechao observed. “Everything else I’m like ‘OK, well I have to cut everything out’.”

Saechao started saving in 2016. She canceled subscriptions, stopped eating out and even got a second job on top of her full-time, middle-class job to afford a home.  

“If I was only dependent on my income from the county then the reality of it was that I need to buy a house way cheaper for what I signed up for,” said Saechao.

Historically, the average cost of a house in the U.S. has been around three to five times the yearly median household income. However, in 2006 this ratio exceeded seven times the median income. This ratio is still on the rise and is currently at 7.58. 

According to the California Association of Realtors, the median home price in quarter three of last year was $542,000 in Sacramento. The minimum qualifying income to afford a $542,000 home was $142,000. 

However, according to 2021 U.S. Census data, the median income of millennials in California was $92,837. Many millennials do not make enough to afford the average cost of a home. 

“It feels like it is a burden, right, because I feel like my life has now changed,” said Saechao. “I feel like there’s a lot of things I can’t do right now, but ultimately at the end of the day, my goal was to purchase and own my own home.”

Dawna Jones is a “boomer” who bought her first home in 1968 in Sacramento for $15,000. Just like Saechao, it was a three-bedroom and two-bathroom home. 

“It was pretty straightforward”, Jones recalled. “We had been saving for a couple years and we had our money in the bank, we didn’t have bills, we had good credit and the house was within our means.”

At that time, Jones and her husband were a two-income household. However, only her husband’s full income and half of her income were considered in qualifying for the loan. Regardless of this, Jones had no issue buying a home. 

“We didn’t change our lifestyle at all,” said Jones, “But back in the day it was not as expensive to live as it is today.”

Taking inflation into account, today, Jones’ first home would cost $133,000. 

“I think the markets are ridiculous,” Jones remarked. “In other words, when we sold our first house, we made enough profit to put a nice down payment on a bigger house. And that was kinda the way it worked.”

By the time Jones sold her first house and purchased a bigger one, only her husband was working while she stayed home. This would have been impossible on Saechao’s single income. 

So, what is wrong with the market? 

“We’re at a weird time because oftentimes we see prices rise for maybe eight years or so, sometimes a little longer, but what was so abnormal this time was that prices began to rise in 2012, and around 2019 the market started to slow down. Then mortgage rates went below 3% in 2020 and it’s like supercharged the trend,” said Ryan Lundquist, an appraiser in the Sacramento area for over 20 years. 

Lundquist describes the current market as “frozen” because a lot of sellers are not selling due to their low mortgage rates causing low supply. 

According to The Mortgage Reports,the 30-year fixed rate fell below 3% for the first time  in July 2020. The lowest rate was 2.65% in January 2021, and the average rate for 2021 was 2.96%. 

As of March 2024, the average 30-year fixed mortgage rate in California is 6.51%, according to Zillow. 

“I think in a normal market, if we had a normal number of listings coming, then we would have more downward price pressure,” Lundquist went on, “and right now we’re just not having that. And one of the problems today is that we don’t know how long sellers are going to be stuck for.”

In a currently unpredictable market, Lundquist notes that other factors create hardships for millennials.

“Everything’s more expensive,” he agreed. “I think on top of home prices, what we have is student debt, the cost of education, insurance, and you know these are really big things. I am of the opinion that it’s more difficult on consumers today.”

Despite these struggles, it is still possible to become a homeowner. 

“I think definitely in today’s age it is harder to become a homeowner, but I think that is the goal– the “American Dream,” said Saechao. “It’s hard right now but it’s doable, and then once you do it, you’re only gonna rise from there.”